Bitcoin Really in a Bubble

by | Jan 31, 2018 | Resources | 0 comments

Bitcoin Really in a Bubble

It is always good to discuss financial bubbles, expert views and problems with Bitcoin in order to answer the question of whether Bitcoin really in a bubble.

Generally a bubble is actually marked by fast and high rise in the price of an asset, which is usually followed by a crash. This increase in prices is called a bubble since it is actually fuelled by unrealistic expectations and speculations which primarily contradict the actual value of the asset.

While market reaches a certain high, depending on investor emotions and speculation, buying stops and selling starts, causing the bubble to burst. The important factor in a bubble is that the price rise does not actually correspond with the asset’s intrinsic value.

Largely internet firms were all the rage during the 90s and were on a path to unprecedented growth. The valuations were high, stocks were rising, and investors were immensely flocking to them with dreams of attaining rich overnight.

The resulting drive eventually led to mass marketing and brand building campaigns from internet firms without much focus on actual products/services and their usability. Moreover even undeveloped and untested ideas from organizations with no track record were earning money in.

As a result bubble developed and it kept inflating till most of the internet firms began reporting losses and recorded revenues that were below expectations. The bubble burst as investors witnessed a huge sell-off started in 2001.

If there is anyone who can be regarded as authority on economic bubbles, its Yale economics professor Robert Shiller who conveyed about human impulses and behavioural finance as important market forces, and he actually termed Bitcoin a bubble.

It is good to understand that it is not just Bitcoin which is revolutionary and the particular use of Blockchain technology has largely opened the door to future possibilities. The huge support is for blockchain technology, and there is no doubt that it has successful future in most of the industries, particularly finance.

Bitcoin is just one manifestation of the good quality possibilities and it has wholly managed to become synonymous with blockchain digital currencies.

In conclusion the key challenge would be in controlling the world governments who do not like to lose their grip on the prevailing economic system. Altogether we are moving towards a world where traditional currencies will be digitized on the blockchain, and this is hugely evident from current developments for blockchain-powered solutions.

Post Tags : Bitcoin


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